WEST CHICAGO, Ill.— NationAir Aviation Insurance today released its annual analysis of the aviation insurance market. As one of the country's leading brokerages specializing only in aviation insurance, NationAir is in a strong position to assess the industry with information gleaned from its 35 years of experience and longstanding relationships with leading underwriters. NationAir manages more than $4 million in aviation assets for its clients.

The report follows in its entirety, delivered by NationAir President Jeff Bauer.

NationAir Aviation Insurance believes 2013 marked another year of relatively soft market rates in all sectors of general aviation. While the market conditions have remained the same for several years, the reasons for that soft market are changing.

At first, increased market competition pushed rates down, in a classic demonstration of the theories of supply and demand. Now, however, rates are being held down by the more long-term forces of structural overcapacity, and thankfully, favorable loss history.

While conventional thinking was that falling rates would eventually push aviation insurers into the red, causing a push for rate increase, insurers have instead been able to stay profitable even at lower rate levels. Lower interest rates, which require insurers to focus more on underwriting profits, were also thought to be a future justification for eventual rate increases.

Instead, over the last two years, we have seen many insurers attempting to make a profit on a smaller piece of the pie, and for the most part they have succeeded. While expense control spurred some of that success, insurers have stayed in the black primarily due to the absence of significant general aviation fatality accidents. As long as this continues, we do not anticipate any real pressure on rate increases. The world’s reinsurers, which are quite profitable, are not exerting any significant pressure on insurers through the premiums they charge for reinsurance. And many insurers are buying less reinsurance anyway. There now seems to be an equilibrium reached: all parties are rather satisfied with their share of the insurance pie, with little incentive to start a rate war to increase market share. With the insurers more focused on the expense side, it will be more difficult for them to differentiate themselves in any meaningful way.

As a result, the key differences in insurance services now lie with brokers, rather than the insurance companies that actually underwrite your policies.

NationAir, www.nationair.com, combines the influence of a national brokerage with the personal relationships of a local broker. Founded in 1978, it is one of the country’s oldest and largest aviation insurance brokers. NationAir, headquartered in suburban Chicago, fields representatives in nine locations across the country, with clients in all 50 states and in 30 countries. NationAir works with all major underwriters and has pioneered specialized programs to help the general aviation community reduce risks and operate more safely.

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